Domestic Auto Market May Suffer Supply Shortage in Q4

Taipei, Sept. 30, 2009 (CENS)--The surge in auto demand in the fourth quarter will overstrain capacity of domestic automakers, possibly leading to shortage of supply, said Su Chun-hsing, executive vice president of Hotai Corp., the largest domestic automaker which produces Toyota models, yesterday (Sept. 29).

Meanwhile, Hotai revised upward, for the second time, its prediction of the total domestic auto sale this year to 275,000 units, up from 250,000 in the previous forecast.

Market insiders reported that a number of domestic automakers, including Hotai and Honda Taiwan, have started to have difficulty meeting market demand from September, a situation which may aggravate in the fourth quarter, as many people rush to buy cars before the expiration of the free commodity tax incentive at the end of the year. The incentive enables buyers to save NT$30,000 from the tax.

One main reason for the inability of automakers to fully meet the surging demand is difficulty in gaining sufficient supply of key imported parts, such as engine and gearbox, due to the recent upturn in the U.S. auto market, plus the continuing expansion of the Chinese auto market.

Another problem is the difficulty of recruiting former provisional workers and working students back to work, as majority of them have joined electronics firms with booming business after being laid off by automakers last year.

Were it not been for the insufficient capacity, domestic auto sale would be able to hit 300,000 units this year, according to a Hotai executive. Hotai raked in NT$5.27 of pre-tax earnings per share in the first eight months, up 20% year-on-year, the most profitable among its peers.